Blockchain and the third trust revolution

Blockchain has the potential to sweep away the central trust authorities of governments, banks and corporations as I discussed in my previous post.

Why? Because blockchain enables virtual communities to re-create the person-to-person trust of small villages and societies at a global scale.

Ancient societies were based on the idea of personal trust: I trust you because I know what you have done. I know the moral and ethical code by which you live.

Blockchain cannot enable people to know a person they have never met, but they can see what that person has done in the community network. Users know the business code which by they live, because it’s encoded into the blockchain as smart contracts.

It’s person-to-person trust at a global scale.

For example, there is a micro-energy grid in New York which lets people with solar panels sell that power directly to consumers using a blockchain. The grid is run for the mutual benefit of the small-scale generators and their customers. There is no utility company in that model.

Blockchain brings providers and consumers together in a mutually beneficial business network, where everyone agrees the rules in advance and plays by them.

If you doubt that blockchain has the potential to be at least as disruptive as the web, consider this: the web has changed how we live our lives with e-commerce, digital banking, streaming music, TV on demand, social media, Yet it has not fundamentally changed the economic models that our world is built on. We still buy music from a music company. We still book taxis from a taxi company or car service. It might be Spotify and Uber now, but they are still central trust authorities.

Imagine if we could connect providers and consumers directly, for the benefit of everyone, not just corporations. If we could connect passengers and drivers, authors and readers, people who want to lend, with people who want to borrow? What would that world be like?

The third revolution

Blockchain is a new type of database. It has key characteristics which enable participants to have a high degree of trust in the data, and the business network. It allows users to take the person-to-person trust of small groups and scale it globally.

Throughout history, we have had to invent new trust mechanisms. The first real trust revolution was coins, and the second was the intangible monetary system.

Blockchain has the potential to be the third trust revolution, sweeping away the monetary system in the same way that that system swept away coins, relegating them to loose change that we use to pay for coffees.

Just as coins and money helped to accelerate global wealth, the applications which blockchain will enable will drive our economy through 21st century and beyond.